It seems like there should be an easy way to figure out how much to spend on marketing each year. You will find many different formulas doing a basic Google search but how do you know which one to choose?
The key is what you are trying to achieve.
If you have not tracked your return on investment (ROI) in the past, my recommendation is the 5/10/15 Annual Sales approach.
If you are an established business with a well-known brand within your target demographic, multiple your annual sales by 5% to determine your marketing budget. On the other hand, if you have strong growth goals or have struggled to maintain your position in the market, you should plan to spend 10% of your annual sales. New businesses, (or if you are introducing a new product line or service) should determine the anticipated annual sales and base the marketing budget off 15%.
When you look at the end number you may feel it is too high, and it could be if you are not approaching your marketing in a strategic way. A budget is simple a number until you put it into action. Tracking your ROI moving forward will help provide a better formula for YOUR business next year.
Want to learn more? Shoot us an email at firstname.lastname@example.org.Tags: Budget, Marketing, Strategy, Tip